The S&P hit its 2010 low on Friday and there has been an increasing amount of fear by the pundits in the media and on the Internet.
Let’s put something in perspective.
Many pundits have made a living by preaching doom and gloom, which is fodder to those less-sophisticated folks who believe the United States is ready to collapse.
For those of us who actually manage money, this is quite amusing.
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For instance, Treasury bill yields slipped under 3 percent for the first time since April 2009. (Low Treasury bill yields generally signal fear by the investing world.) In the four months after April 2009, the S&P rose 23 percent. Today, it is virtually the same price it was last August.
The moral of the story is those who bought equities last year when fear was the highest and Treasury bills were the lowest benefited greatly.
Those who followed my Dividend Machine newsletter did even better and made more than 36 percent in the exact same time frame.
I am not Ivy League educated and I actually manage money instead of selling fear, but I do think 36 percent is better than the 1 percent to 2 percent you would have gotten in a savings or money market account, don’t you think?
Last year, from June 19 to July 10, the S&P dropped almost 5 percent. Then from July 10 to Aug. 7, it rose more than 15 percent. I am not hearing the doom and gloom crowd mentioning these facts, Of course, why let facts interfere with a good story.
This year, from June 11 to July 2, the S&P dropped 6.32 percent.
My hypothesis is that a better-than-expected earnings season and reduced amount of fear should push the S&P higher in the next five weeks, just like it did last year.
Even in 2008, the worst investing year for the S&P since the Great Depression when the index dropped more than 37 percent, stocks were virtually even during this same period
My favorite stocks have survived two World Wars, the Great Depression, 25 percent unemployment and 18 percent interest rates.
The key is to know which stock is suitable for purchase and which stock is priced accordingly.
Warren Buffett, the only man to ever earn $200 billion for himself and his investors, says to be greedy when others are fearful and fearful when others are greedy.
According to the doomsayers and Treasury bill yield market, fear appears rampant.
Now you can continue to watch your hard-earned nest egg deteriorate or start investing in companies which pay you 3 percent to 7 percent on your money and should appreciate during your lifetime.
The choice is yours.
My time tested system will help you decide what stock and what price is appropriate
Combining compounded interest with the reinvestment of dividends has helped me build a dividend stream that covers all my family’s annual living expenses.
Sound interesting? Click on the link below for more ...
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About the Author: Bill Spetrino
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